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An Israeli agricultural engineer inspects marijuana plants at the BOL (Breath Of Life) Pharma greenhouse in the country's second-largest medical cannabis plantation, near Kfar Pines in northern Israel, on March 9, 2016.
The recreational use of cannabis is illegal in the Jewish state, but for the past 10 years its therapeutic use has not only been permitted but also encouraged. Last year, doctors prescribed the herb to about 25,000 patients suffering from cancer, epilepsy, post-traumatic stress and degenerative diseases. The purpose is not to cure them but to alleviate their symptoms. Forbidden to export its cannabis plants, Israel is concentrating instead on marketing its agronomic, medical and technological expertise in the hope of becoming a world hub in the field.
 / AFP / JACK GUEZ        (Photo credit should read JACK GUEZ/AFP/Getty Images)
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An Israeli agricultural engineer inspects marijuana plants at the BOL (Breath Of Life) Pharma greenhouse in the country's second-largest medical cannabis plantation, near Kfar Pines in northern Israel, on March 9, 2016. The recreational use of cannabis is illegal in the Jewish state, but for the past 10 years its therapeutic use has not only been permitted but also encouraged. Last year, doctors prescribed the herb to about 25,000 patients suffering from cancer, epilepsy, post-traumatic stress and degenerative diseases. The purpose is not to cure them but to alleviate their symptoms. Forbidden to export its cannabis plants, Israel is concentrating instead on marketing its agronomic, medical and technological expertise in the hope of becoming a world hub in the field. / AFP / JACK GUEZ (Photo credit should read JACK GUEZ/AFP/Getty Images)
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 GO WITH AFP STORY by Desiree Martin A picture taken on April 12, 2013 shows plants of marijuana at the plantation of the Sibaratas Med Can association in Mogan on the southwest coast of the island of Gran Canaria. The plants grow from cuttings for approximately two months and then blossom before being harvested, dried, stored in jars for a month and later processed to be consumed on site. Spanish law prohibits the possession of soft drugs like cannabis in public and its growth to be sold for profit is illegal. But the law does tolerate growing cannabis for personal use and its consumption in private. Dozens of private marijuana smoking clubs operate across Spain that take advantage of this legal loophole that serve cannabis users who do not want to get their drugs from the streets. AFP PHOTO / DESIREE MARTIN (Photo credit should read DESIREE MARTIN/AFP/Getty Images)
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GO WITH AFP STORY by Desiree Martin A picture taken on April 12, 2013 shows plants of marijuana at the plantation of the Sibaratas Med Can association in Mogan on the southwest coast of the island of Gran Canaria. The plants grow from cuttings for approximately two months and then blossom before being harvested, dried, stored in jars for a month and later processed to be consumed on site. Spanish law prohibits the possession of soft drugs like cannabis in public and its growth to be sold for profit is illegal. But the law does tolerate growing cannabis for personal use and its consumption in private. Dozens of private marijuana smoking clubs operate across Spain that take advantage of this legal loophole that serve cannabis users who do not want to get their drugs from the streets. AFP PHOTO / DESIREE MARTIN (Photo credit should read DESIREE MARTIN/AFP/Getty Images)
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(CNN Business) —  

Marijuana related stocks have been surging lately because a lot of people believe cannabis will be legalized in the United States soon. But the sector has many of the hallmarks of a speculative bubble, and probably needs a major shakeout before the average investor should consider adding marijuana to a portfolio.

“Cannabis stocks are a fad,” said George Boyan, president of Leumi Investment Services. “Who knows where the market will go? And the problem with speculative investments? They all have an expiration date.”

Think of all the e-commerce companies that went public in the late 1990s not named Amazon (AMZN). Most of them are now gone.

That’s not to say that the business of cannabis is doomed to fail. Some companies will probably make big bucks from selling recreational and medical marijuana.

Mergers could help the market mature, but we’re still waiting for some consolidation to take place.

Aphria (APHA), a Canadian marijuana grower, this week rejected a hostile takeover bid from rival Green Growth Brands (GGBXF), for example.

More giant consumer companies need to invest in the sector, too. There’s constant speculation about the likes of Coke (KO) and Pepsi (PEP) eventually getting into the business if marijuana is ever legalized by the federal government.

Some big business support has arrived.

Tilray (TLRY) has a deal with Novartis (NVS)-owned Sandoz to work on medical cannabis products in Canada and other countries where cannabis is already legal.

Cronos (CRON), a company that now has the backing of tobacco giant Altria (MO), has more than doubled already this year.

Canopy Growth (CGC), which has a $4 billion investment from Corona owner Constellation Brands (STZ), is up 75% so far in 2019.

It’s also encouraging to see more Wall Street firms covering the industry. It helps legitimize the sector.

But there are too many “ifs” and “whens” to make investing in cannabis a safe bet anytime soon.

Shares of New Age Beverages (NBEV), Pyxus (PYX) and Charlotte’s Web (CWBHF), which all sell products with hemp and cannabidiol (CBD) were lifted by the passage of Farm Bill in Congress last year that legalized industrial production of hemp.

But now those companies have a regulation problem.

The Food and Drug Administration said after the bill’s passage that it planned to enforce a policy of not approving CBD for food and beverages, but to look into ways to bring those products to market in a legal way.

New York City began cracking down this week on CBD-based drinks and food in restaurants, citing health concerns.